Carlo Ancelotti's first signing at Real Madrid will be Isco. Real Madrid will pay ¤24 million, plus up to ¤3m more depending on the results and objectives achieved.

'Los Blancos' were optimistic on Friday after negotiations with Málaga to reach a deal for the player. On Saturday, Real Madrid finally reached an agreement with Málaga.

Moayad Shatat - Málaga's executive vice-president - had a meeting with Real Madrid's executive general director, José Ángel Sánchez, in order to negotiate a transfer.

The Andalusian club reduced the player's ¤35-million buyout clause to reach an agreement, as both parties weighed up different financial incentive options to be included. Isco is 21 years old and if he wins trophies at Real, establishes himself in the Spain squad and reaches a series of appearances milestones for his team and country both clubs could benefit from the deal.

There was also the possibility of other players coming into the equation - Callejón, Jesé and even Morata's names were mentioned. With such a makeweight, the fee would have been reduced to no more than ¤20 million. However, Real wanted to hang on to these players.

Manchester City was another club hot on the tail of the midfielder and has been waiting for an answer from both club and player. The fact that Manuel Pellegrini managed Isco at Málaga couldn't swing the deal in City's favour. Isco was more interested in signing for Real Madrid.